12-16-2019, 10:21 PM
(12-16-2019, 08:36 PM)Otter Wrote:Appreciate the feedback. I'm definitely not interested in a real bond position after the very strong 2019 run. I do indeed want it as a hedge (reliable as possible). that will offer some dividend yield. I can't excited about gold for the lack of income. Stocks like T are exactly what I am trying to hedge against. It yields like a junk bond but a hedge it is not with that debt. I have a lot of above average equity yielders. Any sense of security one gets from being overweighted in them, the Aristocrats or even Utes is probably misguided when everything reverts to the mean. I was perfectly content with 2% yield on my cash, but that's getting much harder to do in my IRA, and I'm pretty cashy. I guess I'll just have to be a better stock picker to make up for it overall. Patience is what's actually required. This might be a long wait and that's not such a bad thing.(12-05-2019, 08:44 PM)fenders53 Wrote: I'm not informed enough about bond funds, but I know I need to get some of my portfolio into a fund for a hedge I'll need some month or year soon. I do have plenty of bonds, buts it's ALL in the short to very short maturity. Yields have die of course for anything short. I was going to do this late 2018, but was afraid the FED would run rates up higher and wreck me overnight. I sure guess wrong on that one. Now bonds have had a nice run so it's going to be a slow dollar cost average in for sure. Anyway I am thinking about TLT which is 20yr treasuries.
Not sure I'd be looking at bonds on the downslope of a 35-year bull market, when bond prices peaked quite a while ago. This year's 75 basis point rate cuts dropped yields by a third, and the Fed is now signaling a pause. With the stock market at all-time-highs, near full employment, and homebuilder indices hitting levels not seen in 20 years, the Fed cutting yields back to Great Recession levels looks pretty unlikely.
Even a small move back towards normal bond yields would destroy bond prices. Funds aren't individual bonds. You aren't guaranteed a return of capital.
I find it hard enough to tolerate token annual dividend increases in the range of 2%, as that doesn't really keep up with inflation. It's easier to stomach with high-yielders like T, which I treat as income farms. Not sure I'd want to give the government a 20-year loan at that rate, as boomers continue to age into the expensive phase of government programs.